When we think about the causes of homelessness, we often consider factors like unemployment, mental health issues, addiction, domestic abuse, evictions, or lack of affordable housing. While these are certainly critical contributors, there’s another very serious underlying factor that often goes unnoticed – financial literacy. A lack of basic financial knowledge and skills can significantly increase the risk of homelessness, trapping individuals in cycles of debt, repeat homelessness, and instability.
The Hidden Link Between Financial Literacy and Homelessness
Financial literacy encompasses the ability to manage personal finances, including budgeting, saving, understanding credit, and managing debt. For many, these skills are taken for granted, but for others, a lack of financial literacy can lead to devastating consequences.
Without the knowledge to create and stick to a budget, individuals can quickly fall behind on rent, utilities, and other essential bills. Mismanagement of money often leads to debt accumulation, which can spiral out of control, making it impossible to cover basic living expenses. Over time, this financial instability can result in eviction and homelessness.
Consequences of Poor Money Management
Poor money management doesn’t just cause immediate financial distress, it has long-term consequences that can make it difficult for individuals to secure stable housing in the future. Evictions due to unpaid rent or mismanaged finances can tarnish rental histories, making landlords wary of renting to someone with a history of financial instability. Landlords often view individuals with poor financial management as high-risk tenants, reducing their chances of securing accommodation.
Even if someone manages to obtain housing, failing to address the root causes of past evictions, such as poor money management, can lead to a quick return to homelessness. Without learning and applying financial literacy skills, individuals may find themselves trapped in a cycle of losing housing repeatedly.
Breaking the Cycle- The Importance of Financial Literacy Education
Providing financial literacy education can be a powerful tool in preventing homelessness and supporting individuals on their journey to stable, independent living. Teaching budgeting skills, how to prioritise debts, and how to manage money effectively can empower people to take control of their finances and avoid the pitfalls that lead to homelessness.
At SAHS, we incorporate financial literacy into our empowerment sessions. We provide practical advice on budgeting, saving, and debt management, helping women build the skills they need to maintain tenancies and achieve financial independence. Our empowerment sessions also teach personal responsibility, emphasising that when one is empowered, they accept that they are responsible for the choices they make in life and take the initiative to educate themselves on subjects they lack understanding of. This holistic approach ensures that individuals are not only financially literate but also confident and proactive in managing their lives.
This includes guidance on
- Budgeting- Understanding income and expenses, and creating a realistic budget that covers essential needs while setting aside savings.
- Debt Management- Prioritising debts, negotiating with creditors, and avoiding unnecessary borrowing.
- Living Within Means- Recognising the importance of spending within one’s budget and making mindful financial choices.
Practical Steps for Better Money Management
Before receiving any income, whether from benefits or a salary, it’s wise to create a budget that starts with priority payments such as rent, service charges, council tax, and utility bills. By planning ahead, you reduce the temptation to spend unnecessarily, as you’ll already know exactly where your money needs to go.
If you find yourself struggling, don’t hesitate to reach out for support. Contact your local food banks, clothing charities, and other community resources that can help ease financial pressures while you work on stabilising your finances.
Where to Get Help with Money Management and Debt
If you or someone you know is struggling with money management or debt, there are resources available to help:
- Citizens Advice– Offers free, confidential advice on budgeting, debt, and financial management.
- StepChange Debt Charity– Provides free debt advice and solutions tailored to your situation.
- National Debtline– A free, confidential service offering advice on managing debt.
- MoneyHelper– Offers practical advice on budgeting, saving, and managing money.
In conclusion
Financial literacy is not just about managing money, it’s about creating stability and building a foundation for a secure future. By addressing financial literacy, we can help prevent homelessness and support individuals in achieving lasting independence. If you or someone you know is struggling, don’t hesitate to seek help. Remember, taking control of your finances is the first step towards taking control of your life.
